Naira Drops Against Dollar, Zero Spread Deletes Speculation
The Nigerian naira dropped against the US dollar at the Nigerian Foreign Exchange Market (NFEM) as demand for foreign payments increased marginally. The spread or gap between official and parallel market spot rates reduces to near zero.
The Central Bank of Nigeria (CBN) updated spot FX rate on Wednesday showed that the official exchange rate for deals consummated in the currency market was settled at N1534.52 per dollar, from N1533.18 the previous day.
The spot fx rate touched an intraday high of N1535.5000 during the day, according to CBN data, reflecting a surge in demand for dollars. The official rate was priced at an intraday low of N1532 before it closed the day at N1537 per dollar.
The naira exchange rate appears to have stabilised around N1530 and N1540 in July, supported by moderate FX intervention sales by the Apex Bank due to a slip in FX inflows, down by 25% last week.
In the parallel market, the naira settled at N1535 per dollar in the absence of significant pressures, influenced by the authority’s decision to support banks and bureau de change with dollar sales.
The near-zero spread has eliminated speculative trading in the Nigerian forex market, with the authority doubling down on efforts to keep the local currency stable. A slew of fx analysts and investment bankers told MarketForces Africa that it has become a difficult adventure to speculate against the naira with the CBN’s effort to clean the house and rising foreign investor confidence.
Nigeria’s gross external reserves surged to $39.266 billion on Tuesday, according to the CBN, settling at a 5-month high due to successive inflows across sources—representing a daily gain of roughly $124.42 million.
Global oil prices climbed more than 1% as investors focused on developments on President Trump’s tighter deadline for Russia to end the war in Ukraine and his tariff threats to countries that trade its oil.
Brent crude gained 84 cents to $73.35 per barrel, while U.S. West Texas Intermediate appreciated by 92 cents to $70.13. However, gold prices fell by over 1% as solid U.S. economic data reinforced expectations for the Fed to hold interest rates steady.
Spot gold dipped by 1.1% to $3,289.66 per ounce, while U.S. gold futures closed 1.4% lower at $3,336. Analysts said commodity prices to trade in the direction as investors focus on the tariff deadline. #Naira Drops Against Dollar, Zero Spread Deletes Speculation August 1 Deadline for India-US Trade Deal or Face Higher Tariffs – Trump
